Saturday, July 27, 2013

Risk-Aversion

Texan99 put up a National Review article that deserves my audience as well. Kevin D. Williamson argues that it is risk-aversion, not dependence, that keeps single women and African-Americans voting for Democrats. He is not claiming that Democrats actually deliver on the promises - they do partly, but at the cost of wealth-creation - but that this is what they market, and the Republicans don't.

I don't know how one measures motives, but this seems intuitively sound to me.

I am playing in my head with whether this also carries through in foreign policy. Is going to war or not going to war the higher risk strategy?

6 comments:

Depends on the prospective war, the issues involved, and the likely consequences. Going to war turned out to be a VERY high-risk decision for all the European belligerents in 1914 (less so for America in 1917)...otoh, NOT going to war in 1936 (at the time of the Rhineland incursion) was a very high risk decision for France and Britain.

Addressing risk is what we do; it's a major reason for our big heads. The problem is how badly we often do it. We seem to be wired to be blind to some kinds of risk -- like people who drive instead of flying, because the risks of an airplane crash are so vivid, and the risks of driving (statistically much higher) don't make an impression on the lizard brain. Or we flee the risk of a longshoreman's job, where we might hurt our backs, for a white-collar job that almost certainly will lead to diabetes or heart disease.

And there's nothing in our system that links the right to vote with the ability to assess risk skillfully, in part because we're so attuned to the alternative (severe and demonstrable) risks of restricting the franchise.

I think risk assessment for war is heavily skewed by age at this point.

I was in a discussion about the draft recently and it was very clear that a few members of the conversation really were perplexed that the Vietnam War didn't resonate with people under 35.

On another note, risk aversion can also relate to who you believe you'd be on the hook to care for. Women in general are more likely to wind up the caretakers of aging parents or young children, and thus programs that help either would be more appealing. Even an affluent African American family would be more likely to have down and out relatives I'd wager.

I would add that it is not actual risk that matters, but perceived risk. For the Left, the perceived risks of going to war are very much higher than the perceived risks of not going to war, regardless of the actual risks.

As you've noted elsewhere, humans tend to make very poor intuitive assessments of risk.

I think that is excellent, though of course it flows in both directions. A hard free-market libertarian might count his risk of having a child with CF as much lower than it is. Liberals ride these examples pretty hard when making their case, and it's not unfair.

Hidden risk is hard to measure, however. The risk of 30 years of investments that are less than the rate of inflation are very gradual, though the loss compare to even a 5% increase over inflation are enormous. They don't make good, snappy stories you can cover in 90 seconds on NPR.

Oddly, it involves not only doing arithmetic, but in an odd way, believing arithmetic. Which we all think we do - of course we do, how could we not - but the future is invisible, and numbers set in the future take an act of will to believe.